Most stocks drop as Wal-Mart falls while Treasuries pare losses

Most U.S. stocks fell, pulling the Standard & Poor’s 500 Index down from a five-year high, as Wal- Mart Stores Inc. tumbled after an e-mail showed an executive called February sales a “total disaster.” Treasuries pared earlier losses, the yen weakened while gold and oil sank.

The S&P 500 dropped 0.1 percent to 1,519.79 at 4 p.m. in New York after closing yesterday at the highest since October 2007. The index capped a seventh straight weekly gain, the longest streak in two years. Ten-year U.S. Treasury note yields increased one basis points to 2.01 percent after climbing four points earlier. Japan’s currency lost 0.7 percent versus the dollar after Group of 20 finance chiefs resisted adopting a tougher stance on exchange rates. Oil sank 1.5 percent and gold dipped below $1,600 an ounce for the first time since August.

Wal-Mart led an afternoon retreat in equities after Bloomberg News obtained e-mails showing the biggest retailer’s sales were off to the worst start to a month in seven years as payroll-tax increases hit shoppers. Earlier gains in stocks came after U.S. consumer confidence increased to a three-month high and a separate report showed manufacturing in the New York region unexpectedly expanded in February. U.S. markets will be closed Feb. 18 for the Presidents Day holiday.

“This is the first sign that consumers are going to have a weak period here,” James Paulsen, chief investment strategist at Minneapolis, Minnesota-based Wells Capital Management, said in a telephone interview. His firm oversees $325 billion in assets. “It reinforces what a lot of people were worried about in December, with the payroll tax impacting consumers. The market is extrapolating this and that’s why we’ve seen this intraday action.”

Five-Year High

The S&P 500 index closed yesterday at the highest level since October 2007. The index has climbed about 6.6 percent in 2013 as U.S. lawmakers reached a budget compromise and earnings beat estimates at 74 percent of the companies that have reported the latest quarter’s results so far. The S&P 500 has more than doubled since bottoming in March 2009 as the Federal Reserve conducted three rounds of bond buying to lower interest rates and boost economic growth.

Trading of stocks in the S&P 500 was 11 percent above the 30-day average as options on stocks, equity indexes and exchange-traded products were set to expire. The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, fell 1.6 percent to 12.46 today, near a 5 1/2-year low.

Wal-Mart extended lost 2.2 percent. The company’s struggles come after executives expected a strong start to February because of the Super Bowl, milder weather and paycheck cycles, according to the minutes of a Feb. 1 officers meeting Bloomberg obtained.